Good morning, everybody. I'm very happy to present to you together with Benoit and Sreedhar our first half results. I will make the introduction and the highlights. Sreedhar will go a little more into the details on the numbers. Benoit will update you on where we are on our Transform & Grow program, and I will come back for the wrap-up and the outlook. First of all, I want to say that there are, and you will see that in the presentation, a number of changes in this presentation. It's the first time that we report the numbers with our new organization. Sreedhar will go that. All our numbers are including the impact of IFRS 16, and we have changed our numbers in 2018 and 2019, so everything is after IFRS.
Third, you will see that our new CFO, listening to some input from you, has changed a few definitions. There are a few definitions that we are using, and we will comment on them, which have changed from what we were doing before, based on your input. The first half has been good for Saint-Gobain, and I'm very pleased with our results. With a good sales growth, you see sales at EUR 21.7 billion, up 4.3% and 3.5% from a like-for-like perspective, supported by a good trends in the first half. Our operating income is up 8.2% at EUR 1,638 million, which is giving a 8.3% increase like-for-like. It's important to notice that our operating margin is up 30 basis points from 7.3% to 7.6%.
The recurring net income is up 16.7%, given good performance on below operating income items at EUR 944 million. The earnings per share are going up more because we have continued our program of buying back shares. We've bought back 6 million shares that we cancelled, so there is an additional impact there. The EBITDA, which is a new definition, and I will let Sreedhar go into it, is up 8.4% at EUR 2.4 billion. The debt, which is also including the changes with IFRS 16, is at EUR 12.6 billion, and the ratio is 2.6x , which has put us comfortably where we want to be in terms of rating. Main highlights of this first half. First, a good organic growth at 3.5% with good pricing at 2.3%. Sreedhar will come back on that.
This is driven by all geographies, I would say that globally supportive market, plus clearly in a number of areas, some over performance of Saint-Gobain in the first half. A good impact of these sales on our bottom line, on the operating profit, 8.3% like-for-like. We have benefited from our change in the organization. As you remember, we had also last year a few operational issues, which were impacting our results in the first half. We have also a more, I would say, normal industrial performance. A gain of 30 basis points, which I think bodes well for the future. I am very pleased with the first results of our Transform & Grow program. The organization has been in place 1st of January, we are ahead of our targets on most items. Benoit will explain that in more details.
We have a few already, which was very early in some countries. We have already an impact on additional growth because of the synergies of the new organization. We are ahead in terms of the targets, in terms of saving, which allows us to increase the impact on the first year of this plan from more than EUR 50 million to more than EUR 80 million. In terms of portfolio, we are going to be above the EUR 3 billion sales by the end of 2019. In terms of divestment, we have already signed for more than EUR 2.8 billion of sales, and we have a number of projects on the way. Free cash flow, this is again a new definition that we are using now that I think is more aligned with the way you look at it, is up 40% versus the first half of 2018.
The net income, as I said, is up significantly. A very good set of results, which shows, in my view, that Saint-Gobain is over-performing at the moment on reasonably good markets. Better than probably some people were thinking at the beginning of the year. In line globally with what I had in mind in February. I would say that good overall market and a good start of our transformation plan. Now I leave Sreedhar to go into more details in these results.
Thank you, Pierre-André. Good morning to all of you. As Pierre-André said, we have made quite a number of changes in this presentation. Not just the format, but also some of the indicators. It's based on the inputs you all gave us during the last six months. The purpose of making these changes is not just to align the reporting in line with the way we run the business and the organization, but also to make sure that we help you to understand our results better. Let me get into the details. Starting with sales. Sales increased by 3.5% on a like-for-like basis over the first half, and 4.3% on a reported basis, with a positive impact from the exchange coming primarily from the U.S. dollar in the whole sales. The impact of acquisitions is slightly more than various divestments that we did in the transformation program.
Even though we made fewer acquisitions during the first half, we will continue to evaluate various options of acquisitions in a disciplined manner. If you look at the quarterly trend of price and volume, you would clearly notice here that we have remained focused on price, in spite of given the fact that there was a lower trend in the inflation. Clearly, it has helped us to offset the inflation. Not only offset the inflation, but also have the spread between the price and the inflation positive. This is very important for us to make sure that we continue to remain focused because we saw inflation in the first half, even though it was relatively lower than the last year. We expect the few raw material trends to be lower in the second half.
Overall, for the year, at this point of time, our best estimate of the input cost inflation would be in the range of EUR 450 million-EUR 500 million, as compared to around EUR 600 million in 2018. We are expecting some downward trend in some material costs, including gas, even though the benefit of lower gas price will not be significant in the second half, due to our hedging policy. We just have to keep in mind that we benefited from this hedging policy last year in 2018. Overall, the volumes were lower in Q2 due to the lower number of working days and the comparison basis impact. Overall, the volumes were positive at 1.2% over the first half. The negative working day impact in the second quarter was around -1%.
If you see the number of days impact in the second half, we expect to see positive working days impact of +1.5% in Q3 and slightly negative in Q4. If you look at operating income, you will see a very good like-for-like improvement with a 30-basis-point improvement in the margin. Clearly because of positive price cost spread. Positive impact of EUR 35 million of Transform & Grow. Pierre-André said that we are ahead of our program in execution. We continue to work on our Excellence Program, which has given us EUR 155 million cost savings in the first half. We also had a better industrial performance as compared to the last year. If you see the business income, it's up by 7.5%. Non-operating costs reduced from EUR 233 million to EUR 168 million.
If we exclude the positive one-off impact of EUR 180 million related to Sika, which we accounted last year in the first half. The non-operating costs this year includes EUR 51 million related to the transformation program in the first half, and EUR 45 million accrual to the provisions of asbestos-related litigation. Net gains and losses on the disposals here is mainly linked to the divestments programs which we executed during the first half in the T&G program. Here you'll also notice that we are changing the definition of EBITDA, which Pierre-André already mentioned. I think one of the most important change we are making, again, based on your feedback, is we are not including the non-operating cost in the EBITDA calculation. The whole purpose is to equate this EBITDA to more resonate with the cash.
Let's look at between the business income and the recurring net income regarding the financial results of 2018. We need to keep in mind that we had EUR 601 million out of EUR 781 million benefit from Sika transaction, and it was treated as a pure financial gain in the last year first half results. In 2019, it includes the dividend we received from Sika, EUR 28 million, during the first half. Otherwise, the rest of the financial costs are in line with last year, and the average cost of borrowing is coming down. The reduction in overall net income in 2019 is again due to the exceptional one-off from the Sika transaction recorded in first half. However, the recurring net income, which is our real operational performance, increased by 16.7%. Similarly, the earning per share also went up even more.
The overall operating working capital increased slightly but remains stable at comparable or exchange rate. This is an operating working capital. It does not include the other working capital you will see in the cash flow statement. This is how we have been presenting throughout in the last few years. This shows clearly that we have demonstrated the discipline in managing the operating working capital, and that's something which we'll maintain that even in the second half. Coming to the cash flow, based on your feedback, again, we have added this graph showing you all the details from EBITDA to free cash flow. As you can see from the graph, we have not taken the impact of depreciation of the right of use because it's a pure accounting treatment. It's a non-cash item, and it's coming out of this IFRS 16 change.
The financing cost, we have excluded Sika benefit, that is EUR 28 million, which we received as a dividend because we believe it's not the cash coming from operation. The CapEx does not include the investment on the additional capacity as such because these investments are made based on our discretion for the future growth. You see the free cash flow is up by 40% and 30% conversion rate. This is again, the new one which we have added because this is how you all talk about every time you look at the conversion rate, and this is 33% is what is for the first half. I hope this bridge helps you to bring more clarity on the cash generation of Saint-Gobain. Finally, let us look at the debt-to-equity ratio. You see this debt includes the IFRS 16 benefit, impact of IFRS 16.
If you see the ratio, it's slightly better than the last year first half, but absolute debt has slightly gone up. It's mainly on account of the higher acquisitions we did in the second half of last year. Again, I would like to remind you that the debt-to-equity ratio, the way we have calculated here, is by applying the new definition of EBITDA, which I explained to you earlier. Otherwise, our balance sheet remains strong and our credit rating remains stable and is actually in the upper range of the rating. Now let us look into details by segment. Before presenting the results by the new reporting unit, let me explain it. We have now new five reporting units, which are completely aligned to the new organization. As you are aware, the purpose of creating this new organization is to make our organization more customer-centric, lean and agile.
These five reporting units are High Performance Solutions addressing the global industrial customers. We have four regions addressing the construction markets. Within High Performance Solutions, we are organized by market segments. Mobility, which is the largest segment, providing solutions to auto, aerospace, and other transportation markets. You have the other industrial markets like Life Sciences, Construction Industry, General Industry. In Life Sciences, we are providing solutions primarily to the health sector. Whereas Construction Industry is providing the textile and the reinforcement solutions to the large industrial customers in the construction market. General Industry is basically providing various High Performance Solutions to industrial markets. Our four regions are organized by country. Through this country organization, we provide comprehensive solutions to the construction market, adapted to the local needs of the customers. It includes building glass, interior and exterior solutions, and distribution.
I will now comment on results of each of our five new reporting segments. Starting with High Performance Solutions. We saw for like-for-like growth of 1% in H1, 2019. The volume is slightly negative, mainly due to the sharp decline in automotive markets in China and Europe. We have a lower volume in ceramics, where we had an exceptional orders during the last year first half. Mobility market stabilized over the first half in a difficult automotive market. Our differentiation strategy of moving towards high value added automotive glass solutions continues to pay off. Despite the ongoing contraction in Europe and China, our like-for-like sales in automotive glass remains slightly positive as we continue to gain market share in electric cars market, specifically in Americas. Our business in aerospace market is making a very good progress.
Industrial markets remain stable against a difficult comparison basis in ceramics in H1 2018. Activities serving the construction industry showed a strong growth, notably benefiting from the good trends in external thermal insulation solutions. Finally, the Life Sciences continued to show an excellent growth dynamic in the pharmaceutical and medical industries using plastic single-use components. As expected, the first half operating margin is lower than last year due to the very high level of ceramics sales with a positive mix, also partly due to slowdown in automotive market. However, if you look at this margin sequentially, there is an improvement of 60 basis points as compared to second half of 2018. Overall, High Performance Solutions has delivered solid results. Now let us look at Northern Europe. Northern Europe grew by 3.6% like-for-like in the first half. Distribution business in this region had a great first half.
Our Industrial businesses in the construction market also progressed very well, in particular, gypsum and insulation. Nordic countries started the year off with a very good sales trend in all main businesses, in particular, the Distribution business, which benefited from the good dynamic in the renovation market. U.K. remains slightly positive in the first half, but actually declined in the second quarter due to the uncertain economic environment. Sales in Germany progressed. Lastly, Eastern Europe continued to show good growth, helped by easy comparison basis with two float repairs last year in Poland and Romania, which had impacted our results of 2018 first half. Operating income grew significantly, driven by good volume growth, a positive spread on raw materials and energy cost, and with a good Industrial performance. Once again, overall, Northern Europe region delivered strong results with a good improvement in the operating margin.
Southern Europe region, which posted an organic growth of 4.3%. The growth was here led by Distribution business and also the Industrial businesses, specifically plasterboard, insulation, and mortars improved significantly in the first half. The Pipe sales increased slightly, along with our efforts to improve its competitiveness, which we have been working for the last two years. France recorded a strong first half, driven by the construction market favorable in renovation. Distribution reported a very good growth, and insulation activities posted a double-digit growth, benefiting from, again, strong demand in energy efficiency related renovation work. Amongst all other countries in this region, Spain posted very strong growth. Benelux and Italy progressed. Middle East and Africa were down in the first half, particularly in Turkey, it was quite difficult. The Southern region also delivered a very good results.
Let's look at the Americas. Americas region grew by 2.6% on a like-for-like basis. North America continued to benefit from good pricing amid inflation of certain raw materials at the expense of volumes, and again, high comparison basis in the second quarter of last year. Exterior Products stabilized on a like-for-like basis despite strong pricing effect. Insulation business is doing well. Prices are challenged in gypsum, where we still have difficulty to pass on the inflation, and the volumes also remain broadly hesitant. Latin America enjoyed a continued growth momentum, in particular in building glass and mortars businesses. Brazil recorded a good growth over the first half, benefiting from the new organization of its sales team, organized by channel. Operating profit overall remains stable. The Asia-Pacific region increased by 6% organically, supported in particular by building glass and plasterboard.
India benefited from additional sales from its new float, which is a fifth float line, and the plasterboard continued its strong growth trajectory. Amongst our other countries in the region, China recorded a good first half, marked by the launch of the new plaster plant in China. Southeast Asia is facing a competitive environment, again weighing on our sales price. Overall, the operating margin increased from 9.3% to 9.5%. Before I conclude, let me summarize the key points of our first half results. Overall, a very good first half results. A good increase in margin, particularly in Europe, with relatively a good industrial performance and good pricing level, not only offsetting the inflation, but giving us a positive spread, and a very positive impact of the results of transformation program, which Benoit will update you. I give the floor to Benoit now. Thank you.
Thank you, Sreedhar. Good morning, everyone. I give you an update on our Transform & Grow progress. My main message is clear. We are moving fast, and we are ahead of our initial plan. We are very confident about the benefits that Transform & Grow bring to Saint-Gobain. I remind you that there are two pillars of Transform & Grow, a new organization, agile, aligned to our customers, and second, an active and value-creating portfolio management. First, our organization brings already significant growth synergies. I give you a few examples, but there are many more, organized by our CEOs, by countries, by markets, who have a direct and simple line of command on all the product lines within the perimeter that they manage. Few examples, reorganizing our sales force, multi-brand sales force by channel in Brazil, on one side, targeting distribution.
Second, all the technical experts targeting prescription customers. Third, digital and marketplace. It did bring roughly 1.5% of additional growth in the first half. Second example, leverage one very strong product line to pull and accelerate the commercial development of another product line. We are strong, for instance, in glass in India, and that did accelerate the development of our gypsum lines. Third example, to boost innovation. When we gather all our teams, for instance, on the aerospace market within an integrated teams, we gain customer intimacy, and we are able to better co-develop innovation with our customers. On top of those growth synergies, Transform & Grow is also a cultural change in terms of agility on decisions and also in terms of lean internal processes.
We have reengineered and simplified a lot in order to free up time for our teams to spend more time with their customers on added value. We have also selected the best managers in the new organization, 80% of them being native in the country in the perimeter that they manage. They are empowered on all their business lines with a very strong sense of ownership and also straightforward incentives. To be a bit more precise on that, 100% of their incentives are now on the perimeter that they directly manage. When it used to be roughly half in the former organization, the rest was linked to more solidarity items into the broader organization they were part of. All our teams are on board.
We have made a survey end of March, 76% of them are convinced about the benefits of Transform & Grow in terms of growth, additional growth and profit for Saint-Gobain. In terms of rollout, as I said, we have acted fast. All our teams have acted fast. Every country or market is contributing. We moved from roughly 700 operational levers end of February, when I presented that to you, to more than 1,000 by April, and we have been in the execution mode since then. In terms of savings, we are ahead of our initial target. Instead of more than EUR 50 million in the P&L of 2019, we have revised that up to deliver more than EUR 80 million in the full year of 2019. We have already EUR 35 million of that in our first half P&L.
For 2020, we have also revised up our target from EUR 120 million to more than EUR 150 million, and will deliver the full EUR 250 million in the full year of 2021. Frankly, I don't see risk of execution. I see much more benefits than we initially anticipated. We have the right dynamic and the right execution levers everywhere. Now a few words on our digital transformation, which is a big and powerful opportunity for Saint-Gobain, and we have made very significant progress. A few examples. Our distribution business, for instance, is the largest user internally of our group data scientists. We have 80% of our French distribution customers using our digital tools. If I take SOLU+, which is our job quotation service for small craftsmen, it's more than 100,000 views per year.
We have also digitalized more than 80% of our building products information worldwide, which does reinforce our digital presence across all the construction value chain. Our e-commerce distribution sales in France, in the Nordics, are up a strong double digit in the first half, for instance. Also on the manufacturing side, Industry 4.0, we keep increasing the number of robots in our plants, and we use digital to enhance further our operational excellence. Our new organization helps to further accelerate on this digital transformation by combining, on one side, a dedicated central team of experts, of IT platforms, gathering and sharing and leveraging all the best competencies. On the other side, on the ground, a clear empowerment of our local COOs, country or markets, to roll out fast their digital roadmap.
A few words also on operational excellence, which, as you know, has been at the core of our daily focus on the ground for years. We have developed, over the years, group excellence programs, whether on supply chain, marketing, manufacturing. I would say that over the years, sometimes they became a bit heavy and sometimes not so well adapted to all the different local business situations that we have. Within our new organization and our central teams of experts on marketing or manufacturing, we have reshuffled those group excellence programs to make them agile and to make them well adapted to each local needs. For instance, differentiating between a small plant, a mid-size, or large plant on world-class manufacturing. The principle is to service and to help the success of our operations on the ground, rather than the former top-down approach.
This new bottom-up approach makes the buy-in and the local ownership on execution much stronger. As Sreedhar mentioned, we have already started to see some of those benefits in the first half results, with good operational excellence savings. Switching to capital allocation and the execution of our CapEx plan. We concentrate our CapEx on growth. It was 42% in the first half of 2019, in two promising technologies and in two fast-growing countries. We have highlighted on this slide a few examples, numerous projects everywhere that we have been active on in the first half of 2019, whether in emerging markets, in fast-growing areas like life science, or also blowing wool insulation in France. In the first half, 55% of our total CapEx have been spent outside of Western Europe. Now the second very important pillar of Transform & Grow, our active portfolio management.
We are delivering fast on divestiture. Divestitures representing over EUR 2.8 billion in sales have been closed or signed year to date. In H1 of 2019, disposal of silicon carbide glass processing businesses in Sweden and Norway, signature of agreements to sell our Distribution business in Germany, our generalist Distribution business, Optimera, in Denmark, and our specialized civil engineering Distribution business in France. This comes on top of what had been done end of 2018 with the disposal of our Pipe plant in Suzhou in China, the EPS insulation foam business in Germany, and also the glazing insulation business units in the U.K. On the acquisition side, we made 10 acquisitions for EUR 145 million along the selective criteria that you know well. Technology, like American Seal & Engineering, Pritex, or also Norton Ceilings for specialty ceilings in North America. Energy markets, like gypsum in Mexico or Argentina.
Also four small acquisitions to strengthen our local leadership in Distribution Europe. All in all, I'm very confident about the depth of our transformation, organization and savings on one side, portfolio management on the other side, and what it will bring to our growth and profit profile. We have the right teams to succeed and to execute well. I now hand over to Pierre-André.
Thank you, Benoit. Before I go to the outlook, let me wrap up again that I'm very pleased with what has been done. I think the team of Saint-Gobain has reacted extremely well to this program, and I want to congratulate all of them. We are on track to deliver a significant transformation in Saint-Gobain. What is very good for me is that the growth, which is the most important element of this plan, is already happening, where we thought initially that we would have to wait a little more, and we were at the beginning more focused only on the realignment and the cost. We are already seeing some benefits in terms of growth. Benoit gave you some examples. We are ahead in terms of our savings, and the reorganization is bearing fruit very quickly.
We expect from that a 60 basis point improvement in the operating margin when we have the full benefits of the plan. We are ahead, as Benoit showed you, on the target. We will deliver more than EUR 3 billion sales by the end of 2019. We have already, if not in the P&L of 2019, but given what has been signed, we know that there will be the 40 already from what we have done, the 40 basis point improvement in the margin of Saint-Gobain on a full year basis, when taking into account the timing of the closings. We are very confident on this program, both in terms of improving the growth profile of Saint-Gobain and improving the operating margin by 100 basis points by 2021.
When I look at the portfolio evolution, I want also to stress when I say that we will do bit more than the EUR 3 billion for 2019. We have done EUR 2.8 billion, but we have a number of projects which are ongoing, and we continue, as I told you in February, this review of our portfolio in the framework of the new organization, which is giving a new angle to our businesses. When we talk about the local businesses, it is within the countries that we appreciate our footprint, and we can see what are the pluses and minuses and the evolution. Same thing for the markets within High Performance Solutions. I expect from this review, further acquisitions and further disposals. We have a number of projects in the way.
We are also studying for some of our businesses, like in Pipe, as you know, partnerships to strengthen the position that we have. We have had a very good improvement, as Benoit said, in our Pipe business. This plan is an ongoing plan. I don't intend to give an additional target in terms of sale. First, we'll complete that. I want to tell you that we are continuing on this path, both in acquisition and in divestment. If I come to the outlook, I am confident about the outlook for 2019. In High Performance Solutions, we should have satisfactory industrial markets. We see some slowdown here and there, globally, we have also some very good markets. Globally satisfactory.
In particular in the U.S., we have had, I think that in automotive, the drop of the automotive market has been higher than what people expected and what I expected for the first half, 7%. You have seen that in this environment, our sales in automotive market have been slightly positive, even in volume, slightly positive. I think that we overperform clearly. In Northern Europe, we should have further progress after a very good first half. We see good trends. I remind you that in Nordics, we have had very good sales, like last year, in contradiction with what some macro analysts are saying. I think we are going to continue to perform. We say that the rate of growth of this year will be a bit lower than last year. We'll still have good growth in the Nordics.
The renovation market is picking up strength. The only country where we have more uncertain, and I flag the uncertainty, what's happening in the U.K. from a political standpoint is having an impact, clearly. I think the environment is clearly uncertain. We had probably a little bit better first quarter than expected and a little less good second quarter, which was due to some stocking impact before the 31st of March. The rest of Northern Europe is good. Southern Europe, clearly, my outlook for the year is better than what I said at the beginning of the year, I was probably already more optimistic than most. We are seeing, the very good news of this first half, is the French market. The French market for two reasons. First, we don't see yet a drop in new construction.
We know that the statistics are not good. I think maybe the activity is going to go less down than the statistics we are seeing. It's taking more time. At the same time, we are seeing a pickup in renovation. Quarter- to- quarter, in fact, if you deduct the number of days, the second quarter in renovation was good. This is driven by energy renovation. That makes me optimistic because I think there is a lot coming on. For instance, our sales in the first half in France were up double-digit in insulation.
We think that given, I don't need to stress the climate yesterday in France, I think the emphasis of most governments on these topics is going to grow, which makes me strategically, not only for the second half of this year, optimistic that we are going to have a good outcome. France is better than what I thought, which was better than what people thought at the beginning of the year, and I am still quite confident on France. Americas, we expect a kind of stabilization. We have good pricing, but the volumes have been a bit more difficult in the first half, partly because we have privileged price to volume. We have some uncertainties in Latin America, even though that's where we have seen the first benefits in terms of additional growth from our Transform & Grow program. Asia, we should see further growth.
Globally, I would say, markets which are globally a little less supportive, but for Saint-Gobain, given also the importance of France, I would say that my outlook is positive for the second half. In this framework, our priorities is still to grow our sales prices. It has been a strong priority for Saint-Gobain. We continue to be focused on that. We are going to continue the implementation, and Benoit shows our confidence that we will deliver more than what we had in mind for this year in terms of the T&G savings. In addition to our industrial manufacturing improvements and the impact of digital transformation, which is very positive.
For instance, in France, we have also, in distribution, we are still seeing an increase in the cost of digitalization, but we have had a bit more quickly than what we thought also, we have had a productivity gain impact, which is clearly helping. On R&D, we'll continue to invest. This is key for us in the future to increase the part of the differentiated products of Saint-Gobain, and we are focusing on the high level of free cash flow with this. I think that Sreedhar is on top of that as he illustrated it in presentation. Globally, I confirm the full-year objective of Saint-Gobain in terms of operating income. I would say after 8% for the first half, this doesn't sound extremely challenging.
I am also able to tell you that we are targeting an increase of the operating income in the second half, where it's clear that you remember that last year, our performance in the first half was hampered by some operational difficulties. The comparison basis of the second half is a little bit higher, but we are confident we will continue to progress. I'm very confident. I am pleased with the results achieved by the team, and I think we are going to continue to overperform our markets like we have done in HPS, in a number of areas. It's clear that we are overperforming our markets at the moment, and I think that the new dynamics of Saint-Gobain is going to continue to help us to overperform in global markets, which are, I would say, globally a little bit slowing, but not especially for Saint-Gobain. Thank you.
I think now we are, Benoit, Sreedhar, and I, we are at your disposal to answer any question you may have.
Thank you.
We'll start from question from the room and then the internet and then the phone, and then the internet.
The room. Yes.
Thank you.
Yes.
Josep Pujal from Kepler Cheuvreux . I had three questions. The first one on these difficulties that impacted you last year in H1. Could you be a little bit more specific about how much did they help you in this H1 this year as a comparison? The second question is on the pricing in Southeast Asia. You have said that it was a little bit weak, some cases of a tough competitive environment. Could you be a little bit more specific? Which products? Which countries? My third question is more a curiosity, but you have gone from 700 levers identified in February to 1,000 now, and the target remains EUR 250 million. Could you explain a little bit on that? Thank you.
I'll take the second question. In Southeast Asia, we have had in some businesses, some competitive tensions in plasterboard in the first half. It was, I would say Thailand was probably, and Indonesia, were a bit difficult. I think that it is improving at the moment, I am confident we are going to do a bit better. On the comparison with last year, maybe Sreedhar and Benoit will talk about the third question.
Yeah. Comparison with last year, as we said in the past, it's not that straightforward to calculate exactly the precise numbers. If you know that last year we had various reasons for which the results got impacted. One was because of the weather conditions, which was certainly harsh winter impacted our sales. That's something which is very difficult to quantify because you know that in many of the countries, we do have this shortage of labor, especially in the developed countries. You don't know how much we recover in the Q2. That's one element which is still not easy to quantify. Otherwise, in terms of industrial performance, I think the best way to look at is to compare the performance we had with glass in the second half of the last year.
I think that difference should help you to understand the impact of the industrial performance. The only thing we want to confirm is that the industrial performance is certainly better than what we had last year. We are making progress, and last year was certainly an exceptionally difficult year for us in terms of industrial performance.
Benoit?
On your question regarding the lever. First, it's not proportional in terms of savings. Second, we had a lot of cost savings initially. Most of the short-term actions were on cost, and after that, we have developed more growth actions. If I take, for instance, large country like France, we have launched a new organization in France in end of May, early June, which is more driven by growth. The cost actions were taken initially at the beginning of the year. We moved from mostly cost actions at the beginning to much more growth levers into the full year. After that, we don't intend to go to 1,000 or 500 or 2,000. We have a lot of actions.
They are good, and as I said, we have entered, since the beginning of the year, into the execution, making sure that we deliver the full potential of all those actions.
Laurent Runacher , Exane Asset Management . I welcome your increased target in terms of savings, but I'd like to understand what is your ambition in terms of what is the retained operating profit you will get from this additional savings?
Sreedhar?
I know this question comes because we have an operational savings, which we run the operational excellence program. We have always said in the past that this operational excellence program helps us to offset the other cost increases we have. Coming to the T&G savings, we said that it will straight away, it should reflect in the operating profit because what we are trying to do in the T&G program is trying to adjust our structure. I don't expect this T&G savings to get anywhere disappeared. It should be there in the operating profit.
That's why we said we have in mind to increase our margin at the end. We are starting to see that. We have EUR 35 million in the first half, in the P&L, directly in the P&L net. Yeah.
Yes. Good morning. Sven Edelfelt, Oddo. Three very quick one, probably. First one, there has been a meeting yesterday at Bercy, with Pont-à-Mousson unions. I just would like to know whether you had any insight on this one before the press take care of it. Second one on Leroy Merlin. Leroy Merlin, they have recently launched an offer for a kitchen. Do you believe this is a game changer for Lapeyre? Could it mean that you will be selling Lapeyre to Leroy Merlin? The last one is on POINT.P infrastructure. I just would like to know whether the transaction include the 2 million cubic meter of ready mix concrete you have. If not, does that mean this activity, ready mix concrete, is a core business for you? Thank you.
I will answer the third and the second one, and Benoit will answer on Pont-à-Mousson. No. On concrete, in fact, we have had this question, asking ourselves this question for a long time. I think that what we do is really things which are linked with our merchanting activity. For small type of job, it's not at all the infrastructure type of pre-concrete. It's clearly very useful to be able to offer that to our customers. This is not part of the sales, and this is when it is very linked with diffuse market, I think it's like a number of competitors of POINT.P have the same strategy. I think for the diffuse market, we are keeping an activity there. In fact, we have been depending on the region and so, and the way craftsmen work in different regions.
We are more present in the western part of France than in other parts of France. It's really linked with the actual demand from our customers of POINT.P. It's not an activity in itself. It's at the service of the rest of POINT.P. Concerning kitchen, no, Leroy Merlin has done kitchens for a long time. The game is not changing. I think it's part of the competition, and I don't see any change for Lapeyre, where we are focusing on the improvement of our performance, and we expect to see an improvement in the second half. On Lapeyre, Benoit, you were not there.
The new rollout of the new kitchen offer of Lapeyre, which is very good, so I invite you to go and see our new offers of kitchen. We have also a new range. Which is very nice.
Just launched.
On the Pipe situation, as you know, we informed the unions mid-February about the fact that we were thinking about partnerships for Pipe to strengthen commercially, industrially, our Pipe division long term. It became public. We had, of course, some discussions with local politicians, national politicians. Bercy got involved because it was quite reasonable to have also a third party administration view on that. We had a good discussion with all relevant stakeholders, and recently, some of the local politicians wanted to have an update before the summer, which they had yesterday. I can see that you read "L'Est Républicain." It's not yet in the national press. It was a regular update on what's going on in terms of various discussions on those partnerships and different options. Nothing new.
On our side, locally or in Paris, we have also regular discussions with all stakeholders to make sure that everyone is in the loop, so that everyone can support the partnership. We did exactly the same when we launched the Projet d'Avenir, so the restructuring plan of Pont-à-Mousson a bit more than two years ago, which is doing very well ahead of plan. Profitability of Pont-à-Mousson and Pipe division has improved a lot over the last years. Okay. [Foreign language]. If you'll mic to François.
Monsieur. I have two questions.
Yeah.
First one regarding the difficult subject of Pont-à-Mousson and also Lapeyre. Pont-à-Mousson, you mentioned an improvement in results. Do you mean that you are now in positive numbers versus of EUR -40 million last year? Lapeyre, are we now in positive numbers? A question regarding the situation in the exterior products in U.S. and insulation and plasterboard in Europe and in U.S., where do we stand with price and volume? Thanks.
I'll take the first one, Benoit, you answer the second one. You have seen a very significant improvement of the profitability of Southern Europe in the first half. Clearly, France is around 75% of Southern Europe. We have a very significant improvement of profitability in France from most of our businesses. Yes, Pont-à-Mousson is in the black. In terms of Lapeyre, we are still a negative result in Lapeyre. Clearly, as Benoit said, in Pipe, we are seeing a significant improvement of the projects that were launched two years ago. We are a little bit ahead of schedule on that one. On the second question.
It's insulation gypsum, but a bit all over the world. It was a-
No, but it's different in Europe and in U.S. Yeah.
In the U.S., we had a good first half in insulation, partly on the pricing side. Volumes were a bit softer, but a good evolution on the results. A significant improve over the last two years. Gypsum has been a bit tougher on volumes and pricing, which is different from the exterior products. Roofing has been a bit more significant in volumes over the recent weeks. The price increase that we have put out should stick. Roofing and siding have been more positive, partly on pricing, and a bit of fragmented storm activities in the recent weeks, which help roofing. Gypsum has been a bit more difficult in the U.S. on pricing recently. Don't forget that in North America, we are quite significant in Canada for gypsum.
Canada, as you may know, but the construction market in Canada, in big cities, is quite down this year. We are a bit more impacted by Canada than the U.S. situation. In Europe, overall, it's a good momentum on insulation and gypsum in most countries, both on volume and price. Yeah. I mentioned specifically insulation. I think that in insulation, we have seen very good growth in France, and I think that the forecast for us for this business in the various countries in Europe is very positive. Yes?
Yes. Arnaud Pinatel from On Field Investment Research. I would have three questions, if I may. The first one is about your Transform & Grow program. Just wanted to understand what the 24% of your managers who are not convinced by the program are flagging, and what are you going to do with them? Because I suspect that you want to have 100% addition to be successful. Second one would be on the development. You said you have no taboos in terms of disposals. Could you consider in the coming years to exit fully distribution? Regarding acquisitions, we can see that you have spent a lot on bolt-ons on the HPS. Will you continue to have, what I will call a niche market approach on the HPS side, or do you need more critical size over time in this division?
My last question, sorry, is on the price and cost spread in H2. You mentioned that because of your hedging, you will not fully capture the benefit of the decline of the gas price. We can see on the pricing side, sorry, that the base of comparison are a little bit more challenging in H2. Can we expect a new round of price increase in the second half? Or do you see the spread varying in H2? Thank you.
Benoit, the first one, I'll take the second one, and Sreedhar the third one.
On the first one, well, first, we are transparent with you. Second, you take the glass 1/4 empty, I take it 3/4 full. Third, it's a survey that we did end of March amongst 3,000 managers, because we wanted to have the baseline just three months into the program. I consider that as a very good, positive feedback. That 76%, even though not 3,000 managers had seen all the details and all the communication and all the action plans for the coming two years on Transform & Grow, after only three months, they were convinced and embarked on the power of Transform & Grow. I'm extremely happy with the 76%. Of course, the goal is to embark 98% or 100% of them. In those large, deep cultural changes, we have to embark a lot, and so it's not a dictatorship.
Yes.
It's trust, empowerment, and we cascade, we communicate a lot internally on all this, because what gets shared, gets done. It's more bottom-up approach than a top-down, let's do this, let's do that. Frankly, 76% is, I think, a huge, good starting point. Of course, we'll continue to revisit that going forward. I consider that as very good.
At the end of the day, I prefer managers who are a bit sad people but deliver than managers who are very saying, "Oh, it's great, it's great," and don't deliver.
I'm sure you will redo a survey, and we will see the 100%.
Yeah.
That's the goal.
On strategy, I think I already answered this question, so I'm going to continue to give you the answer. No, we don't have in mind to sell our Distribution business as a whole. We are looking at it in the framework of our new organization. As I said, given the strengths we have in the different countries. There are some countries where we have increased our presence in Distribution recently, last year in Norway. If we have opportunities to increase our presence in France to do further consolidation, we will do that. It's really a country-by-country approach, given the footprint we have in these countries and what it gives to our program. As I told you already, I think that there is, with the digital revolution in our sector, the cars are moving.
When you are very strong in distribution, it's a big plus in the future, in my view, for the overall footprint when we are in that situation in Saint-Gobain. I think it's a country approach. In HPS, we have always been having niches, huh? We have always had a rule, which is in all these niches is, 15 years ago, we called it gold, silver, bronze, or out, which means that we want to be one of the main leaders in each niche. At that level, that we need to appreciate. We have been exiting some businesses. We have been adding some more because the markets are changing. We are going to continue to do that. We don't have an issue of a critical mass.
There are some adjacencies, some which are small, some which could be bigger, that we may consider in the future in that business, where clearly in terms of innovation, R&D capabilities, that there is a critical mass impact. I think this is very important for the rest of the group, this critical mass of R&D. I think we have it. We could expand, but I don't think we are subcritical today in HPS.
Sreedhar?
Yeah. Coming to your question, whether we are going to have in the second half positive spread. As an organization, we are extremely focused on cost price, and this is something which we have consistently done, leaving very few exceptions. In the first half, we did have a lot of inflation, quite a lot of inflation. Looking at what I see, the current trend, we hope that we are expecting that the inflation will be lower in the second half. In any case, we would remain focused on price. Our objective, at least, is to make sure that we pass on all the inflation.
Sorry, just to understand clearly, your pricing effect was +2.5%, if I remember well, in Q1, + 2% in Q2. The base of comparison in H2 is more challenging. We should see a sequential erosion, a sequential stability for H2? Can you push prices in certain activity to get more benefit?
We are pushing prices. It's not that we are going to stop pushing prices. Clearly, roofing is one example. We want to go and push for price. Asphalt is something which went up, and there are a lot of signals that it may come down. We need to be cautious. In all our businesses, we constantly look for opportunities to push prices. Sequentially, I expect, based on what I see as of now, and it's always difficult to predict, because it's pretty volatile market. Sequentially, the inflation is coming down. We hope it will come down, and the spread is what is important for us, and we would remain focused on making sure that the spread is positive.
Yeah.
Good morning. Nabil Ahmed, Barclays. I actually got three questions, if I may. One on the outlook, one on the margins, and one on Transform & Grow. First of all, on outlook, you seem to be a bit more cautious on the Americas, and if I understand correctly, on both North and South America. Could you be a little bit more specific on what has deteriorated here? In North America, is it the comment you made on gypsum, which is facing more difficult environment for both volume and pricing, or is there anything else change on the way you see the outlook in insulation and roofing? On LatAm, I thought you were quite optimistic on Brazil. Has that changed, or are there other specific countries where you see trends that are weakening? My second question is on the margins.
Do you see the HPS margins in H1, which were very strong, so congratulations for that, sustainable into H2? Are you still guiding towards something that will be closer to H2 2018 margins? Lastly, on Transform & Grow, sorry if I misunderstood, but I'm not completely clear why you are increasing your savings target for this year. Is it the removal of the management layers, people are leaving earlier Saint-Gobain, and therefore you got more savings in 2019? Is it that you are moving faster with the shared services usage and therefore getting more saving on that? Thank you.
The last one and maybe U.S.
Well, on the savings, it's mostly that we move faster. When we initially put out the EUR 50 million target, it was end of November. Frankly, it was a bit more of a desktop analysis than the bottom-up analysis from all the operational levels. We have firmed up that, and the teams have executed extremely fast. It's acceleration of the actions rather than changing the full scope by 2021. It's mostly a timing issue and a lot of cost actions done very early in the year.
In practical terms, that means headcounts decreasing earlier than expected?
Overall, all those actions, it's not only headcount, but all those actions going faster than initially anticipated end of November, when we announced Transform & Grow, end of November of 2018. On the outlook in Americas, I think we answered already, which is, yes, a bit more challenging in gypsum, partly on pricing, a bit better in Exterior products, partly roofing over the last weeks, and we are confident and very active on the pricing that we have set out for roofing. It's pluses and minuses, good overall in insulation and ceilings, so the pluses are more on the Exterior products and a bit of the negative on pricing in gypsum. Overall, a good stabilization of North America.
In LatAm, when I say, clearly, the macro environment in LatAm is less good than it was we anticipated at the beginning of the year.
Clearly, there are some forecast revision in Brazil. We are optimistic to over-perform the market, which we have seen in the first half. Clearly, the market in Brazil at the moment, it's a bit more difficult than what we anticipated at the beginning of the year. That being said, Brazil, we know that it changes very fast.
Mexico.
Sorry?
Mexico a bit.
Mexico is a little also, the economy in Mexico is a little bit less strong than we had anticipated for the domestic market. That's why we are a bit more cautious on South America. Concerning HPS, we flagged many times that the second quarter, especially sales and profit, and because of that, the first half profitability of 2018 was a very high level. We had some exceptional orders in ceramics with a very good mix. That we didn't have in the second half of 2018. We didn't have in the first half of 2019. We don't expect to have that in the second half of 2019. That being said, I think that the kind of level of margins we have in the first half looks to us sustainable.
Thank you.
Next. No? Yeah. Now, if there is no more question, I go to the call. I think it's Will Jones.
Yes. Ladies and gentlemen, if you wish to ask a question by phone, please press zero one on your telephone keypad. We have the first question from Will Jones from Redburn. Sir, please go ahead.
Excuse me. Thank you. Three, if I could, please. The first was just around exploring the group's volume performance. If we look at the first half pre the days effect, I think it was around 2% growth, and it was about +0.5% in Q2. Just when we think about that, I guess, the run rate that you would carry forward and think about for the second half, should we think about more of the H1 overall or more around the Q2 in terms of that difference for like volume growth going forward? The second one was just maybe in construction glass in Europe. Could you give us a bit of an industrial update on anything we need to be aware of at all around capacity or competitive behavior? Is anything changing on the supply side, I suppose, in glass?
The last one was more of a technical one, but when we look at Americas in your new format, I think you did a 9% margin in the first half last year and a 13% margin in the second half. Is there any reason why that margin is so much higher in the second than the first under that new format? I guess, do you think you can match the 13% again as we look to the second half of 2019?
I'll take.
Thank you.
I'll take the first two, and Benoit, you take the third. On volumes, globally, I think that f or me, the run rate is more the average between Q1 and Q2, so it's the first half. We will have, on the other hand, a positive one in the Q3. We have had, as I said, in HPS, a very difficult comparison basis. I remind you that last year, if I am correct, HPS was up 10% in the Q2. The basis for the rest of the year is more the average of 2018. In HPS, we had last year, already a drop in some markets in the second half. The comparison basis becomes clearly much easier.
That's why, for instance, if you say what the automotive makers are saying, if I try to summarize what they say, they are slightly negative to flat for the second half versus -7% in the first half. The comparison basis is better. HPS, I think will have an easier base than the Q2, clearly. We'll have also an easier base in the U.S. versus Q2, where we had also last year, a very strong increase. It's linked with the stocking, de-stocking our distributors in roofing. We had also in Q2, you would have noticed that the Northern Europe Q2 was less good than the European Q2 in Southern Europe. I think that it's always difficult to predict, Benoit already talked about that.
Sreedhar talked about that the weather impact, we have clearly had last year, a very good second quarter, especially May and June in some countries in Northern Europe, in particular, the Nordics. The comparison basis of Q2, we caught up last year a little bit of the bad weather of the first few months in May and June. In France, we didn't have this impact last year. I think we didn't caught up. That's why we have a little better. That means that the European basis was a little more difficult in Q2 this year versus last year than Q1. If I summarize all that, it means that I think that there is no, in my view, real downtrend globally in the Q2 volume versus Q1 as a run rate. That's what we are seeing.
In terms of construction glass, the situation we didn't have enough capacity. That was a conscious decision that I spoke about many times in the past, in the last two years. We were buying glass for our needs. The drop in the automotive market is having an impact. At the moment, we are, I would say, more balanced. There are some capacities which are going to come on stream in the next 18 months. There are also some repairs. I think that the capacity balance at the moment is relatively on par at the moment. I said that already for two, three years. We don't expect a significant increase in the price of flat glass. We are working on our mix. We are continuing to improve our mix. The third question that Benoit can answer.
Well, H2 margin last year in North America was particularly high, thanks to a very strong pricing environment and a positive spread versus raw material and synergy. We expect that second half to be a bit challenging for this year. We are not going to repeat the same level of margin, even though we are very focused on price, as you have heard already, partly on roofing.
In Americas, there is also generally the second half is better than the first half, yeah. Next question?
Thank you.
Thank you. Next question comes from Arnaud Lehmann from Bank of America. Sir, please go ahead.
Thank you very much. Good morning, gentlemen. I have three questions, if I may. Firstly, thank you to Fred for slide 12 on free cash flow. That's very helpful. You give a bit of granularity on CapEx in particular. I think in the first half we had about 2/3 on maintenance and 1/3 on expansion. Can you confirm that this is the right level for the full year and going forward, about 2/3 maintenance, 1/3 expansion? Also, if I just look at the maintenance, that means around, if we annualize about EUR 1 billion per annum, 75%-80% of depreciation, is that the right order of magnitude? That's my first question. My second question is on the share count. You're right, it's actually down compared to June last year, but it's a little bit up compared to December 2018.
Would you expect your share count to actually decline on a year-on-year basis at the end of the year? Are you going to continue to do some share buybacks? Lastly, could you give us an update on your CO2 position? We're getting close to the phase four of the EU Emissions Trading System. Do you have excess quotas from the previous phases? Do you see a risk of being short CO2 in the next 2-3 years? Thank you.
Okay. Sreedhar take on the first two. I will answer the third one.
It's true that we have given the split, and this is something which we'll continue to give in the coming days. Your question is this ratio is going to remain? It's very difficult to answer because it depends on the projects and the time of the execution of these projects. I don't want to put a ratio to it, but I can only say that the overall CapEx, the investment, which we said both tangible and intangible, that's the plant and machinery and the intangible assets, we will stick to what our target is to remain at the level of last year. That's one thing. Coming to your other question on depreciation, it's very difficult to calculate the depreciation.
It depends on the assets which we have, which we are investing on, the year of depreciation is not the same, so it can vary from asset to asset. Again, that's not a question which I would be able to answer you with a very precise number. Other question on the number of shares. Actually, the number of shares has come down by 600,000 shares. End of last year it was 544 million, and now it's 543.4 million There is a small reduction.
Maybe just to add on what Sreedhar said on CapEx, it was exactly 42% growth in the first half. As Sreedhar said, it varies based on the timing of those products. If we take the last five years, the 2/3, 60/40 that you mentioned is correct.
On CO2, we don't have issues on CO2 in our businesses. We don't think that there will be an impact in the next, before 2027, 2028. We don't have issues with CO2. I remind you that globally, Saint-Gobain is a very significant provider of solutions in terms of CO2. We are reducing our own footprint. I gave a target to reduce by 25%, and we are on track. We publish that every year. We have had a significant improvement last year, we are on track to reach this target. The second point is that each time we emit 1 ton of CO2, the products, when they are installed during their lifetime, they save around 90 tons of this CO2. Saint-Gobain is a very significant part of the solution to the CO2 reduction in the planet.
I think on this front, not only I'm not worried about the cost impact, but I think that we are a very important green stock. I am very strongly supporting the involvement of finance in this climate change program. I believe that the investment community is, together with the young generation, the two forces which are going to make it happen despite some governments. Clearly, I urge the finance community to be active in this climate change program, which we badly need for our future.
Next question.
Next question comes from Manish Beria from Société Générale. Sir, please go ahead.
Yes, good morning. I have two questions. The first is on your net debt guidance for the year. In the first half, obviously net debt, excluding the IFRS lease accounting, actually have increased because of huge working capital investment. This is normal. Every year you have this increase. Just trying to understand, because you have done some divestment, maybe signed it, but not got the money. How much you expect from those divestment, and what should be the net debt at the end of the year with the working capital reversal that will happen in the second half? Should we expect with this disposal and the working capital reversal in the second half, the net debt will be lower than the last year, pre-IFRS? This is my first question.
The second one is basically there is a lot of moving parts, I mean, the base effect in the second half of the operating profit and this price-cost spread and things like that. Just wanted to have a word, like, okay, in terms of EBIT margins, do you expect in the second half to be improving versus last year?
Okay. I know Manish has this difficult question. I don't think any of us can make a guess out of it, how much would be the exact precise number of debt at the end of the year, because it depends on various factors. How much acquisition we'll make. Acquisition, again, depends on how much we are able to make it happen, because it depends on price, it depends on various criteria. Divestment, again, clearly we have worked on this. We have a lot of projects identified on divestment. Again, we don't know exactly what time we would make it happen. There are lots of ifs and buts in all this. Only I can say is that the debt is, if you see the ratio as compared to the last year, there is a slight improvement.
There's a lot of awareness that the debt is something which we are, as an organization, we are looking it much more deeper. I can only say that we are going to remain disciplined. We are going to work on it. At the end of the day, the rating, what you have is quite solid. We were earlier thinking that with the IFRS 16 is the rating would make a big difference. Actually, the agencies, they take into account their own estimates, and we now see with the real numbers, actually, we are in a lightly above range of this rating. We are quite well-positioned as far as the rating is concerned.
Concerning the EBIT margin, as I am not quantifying the increase in operating profit like-for-like for the second half, I'm not going to quantify the increase of margin, but we expect an additional increase in the margin versus the second half of 2018. Next question.
Just maybe just a follow-up. On the net debt, let's assume you don't do any more divestment, but what you have signed, you get the money, and maybe you don't do any more acquisition, so you have the Scope impact. If you assume these things, then what will happen to the net debt with how things are moving and what we have seen in the first half?
We don't make those assumptions because we don't know.
Okay.
Next question.
Yes. Next question comes from Yves Bromehead from Exane BNP Paribas. Sir, please go ahead.
Good morning. Thank you for taking my questions. I'll have three if I may. I appreciate it. It's already been a long call. The first one is on the consideration of the divestments. You mentioned that you've already achieved about EUR 2.8 billion, signed or executed. Are you also running at around 90% of the EUR 1 billion target in terms of value consideration? Following up on this question, given that you are running ahead of expectations, how should we think about margin expansion versus your initial target of 40 basis points impact from divestment and 60 basis points from cost savings? My second question is on capital allocation. Could you give us more transparency on how you will use the proceeds of these disposals? Could the group get below the 530 million medium-term share count objective? What options do you have in terms of shareholder returns?
Thirdly, we have recently seen some of your U.S. competitors launching strategic reviews, including in the plasterboard industry. Given your flexible balance sheet, could you look at consolidating this industry and rationalizing capacity to increase prices and margins? Thank you very much.
Coming on cash, you just have to keep in mind this objective was set during the Investors Day in 2017. If you just take into account all the divestments we did from that point, we are close to 60% of what we said end of June. If you also take into account, which is not yet closed, the largest divestment which we are doing is the German Distribution business. We also recently announced the divestment of DMTP. All this should help us to come closer to 90% of our target as of now.
I take the three others. On cash allocation, I think that the graph that Sreedhar gave on the cash we generate, then there is a second part, which is allocation. I always answer the same way. There are four use of this cash, and I think that the new presentation help to understand the way we do it. There is first a gross CapEx. There is a dividend. There is acquisitions minus divestments or divestments minus acquisition. No, sorry. The divestment may come as cash. Anyway, acquisition. The fourth one is a share buyback. I am always looking at these with the first one and the second one being prioritized over the third one and the fourth one. Between, so first our gross CapEx, and our dividend, following our guidelines.
Then for the two others, depending on the, we are more opportunistic, and that's what we have been doing, and we'll continue to do that between share buybacks and M&A. In terms of the margin increase linked with the Transform & Grow program, I think I answered during my presentation. At the moment, we are not changing our targets of 100 basis points on the bottom line, and I can be quite happy when we have delivered that. In terms of the deconsolidation opportunities, we are regularly looking at what's going on in all our markets. As I said, we have been focusing more on small, medium-sized acquisitions, but we are also, and we have the power in terms of balance sheet to do a bit bigger ones. We are looking at. There are a number of opportunities which have arisen. You mentioned this one.
There have been others. We are very disciplined on price. That means that there are some significant opportunities which we have declined. We are studying in view of the synergies we can get, the price we can pay, whether it makes sense, being very strict on our capital discipline as we have been there. That's something. It's part of the things we are looking at. Next question.
Thank you very much.
Next question comes from Eric Lemarié from Bryan G arnier. Sir, please go ahead.
Yes. Good morning. Thanks for taking my question. It is regarding France. How do you explain you do not feel the slowdown in the new housing in France? Is it because you are more late cycle in your view? Maybe there is some geographical issues? Maybe you are now much more exposed to renovation than a few years ago? Maybe statistics are not maybe representative of the real market trends, what is your point of view on that?
My point of view is, the most important thing is that I think some statistics that are seeing in terms of professional association don't correspond to the reality. I think that when we have a growth of 4% in France, I see that the renovation market would be flat, it cannot be. I know we are good. We are gaining market share. But most of the other merchants are also customers of our activities, and our industrial activities are running. I talked about insulation, even at higher space. I think globally, the construction market in France, and I think our distribution activities is a good proxy. We are doing well. I think we are over-performing, as I said, but I think the market is good in France, also. I think the statistics that you may look at don't represent what's going on.
I think I've already said that in the past, and I continue to say that, and our figures show it.
Do you think it is right for the new housing as well?
I already answered that question. Yes.
Okay.
No, sorry. On new housing, it's a bit different. What I said on new housing is that there has been, and we have seen in the past, a delay between housing permits, housing starts, and the activity. I don't say the statistics, which are official statistics on housing permits and housing starts are wrong. That I am not saying that. What I'm saying is that they don't translate into activity for the time being. The delay is longer, and they may not completely transfer into activity. That's what I said. No, the statistics on housing starts, I'm not saying they are wrong.
You can also.
Behind the statistics, we are over-performing the market.
Yeah, that's what I said.
We measure it. We gain 20,000 small customers in our Distribution business, which is over the market. It's also our domestic market which-
The market is better than.
The market.
Okay. Thank you. Very clear.
One more, okay.
We haven't any question by phone.
There are no more? We go to the internet.
Hold on.
First question from Robert Gardner. Maybe Sreedhar, you answer.
Yes. The question is, what is the price and volume effect for Q2 by division?
You gave it in your presentation.
Yeah, sure. It's there, but I can repeat. For the Q2, it's specifically for Q2. The HPS was 1.5%, the volume was -1.9%. Northern Europe was price 1.5%, the volume was -1.4%. Southern Europe was 2.1%, volume was 1.6%. Americas was 4.2%, volume was -3.4%. Asia was -0.5%, volume 3.9%.
The next question is also for me. It's can you summarize the EBIT to be received of the EUR 2.8 billion sales and EBIT impact? I think you already answered that question–
Yeah.
–on the proceeds. Gregor Kuglitsch from UBS. Is your comment on a more challenging H2 implying both lower organic sales and operating income growth versus H1 2019? I think I answered on organic sales growth. I thought to say that the running rate of the first half and not the second quarter doesn't seem a bad number. In terms of operating income growth versus H1, the margin, I think I answered the same, it will be slightly higher. Also, it will be the case this year as in terms of number of days, there will be more days in the second half. On the other hand, compared to last year, the second half of last year was much better than the first half of last year. Question from Elodie Rall, JP Morgan.
You had a good performance on working capital. How do you see the evolution in the second half? Do you expect further improvement in H2?
I'm happy that she's recognizing it.
Yeah.
Good. We will continue to remain disciplined. We will remain disciplined. We will make sure that we keep this under control, and that's something which we have done it historically.
Another question from Elodie Rall from, in the Americas volume, we are down in H1 and your comments sound more cautious than before. Can you provide more color and do you see further pressure on margin H2, noting margin in H2 last year was 13.3% versus 9.0%? I think, Benoit, you already answered that question.
Yeah. It's purely the mix of a bit better in exterior more difficult in interior products.
Previous guidance for restructuring cost was EUR 100 million in 2019. Do you expect this to change given you are accelerating the savings plan?
At this point of time, we want to keep that number as it is. We are not changing that number for 2019.
What was the contribution on Forex in EBIT in H1, and can you clarify if your definition of like-for-like growth in its total income includes or excludes this forex impact? No, in like-for-like, there is no forex impact. There was some impact last year, which was not forex, but which were not completely perimeter.
Yeah.
With perimeter, some Argentina and the consolidation–
Yeah.
–of Venezuela.
Yeah.
Can we get price versus volume by division? I think you just answered that question. While we know you have disposed of businesses, we said over EUR 2.8 billion, what is their promised profit figure, and how should we think about it in terms of timing and impact on scope effects in Q3 and then into full year 2020? I answered in terms of 2020. In terms of Q3 and Q4, it depends on the timing of the closing of these deals, and sometimes there are regulatory approval, and we don't control completely the exact t imeline in France, sometimes some social regulations. That's the question we had, and I think that with that concludes our meeting. Thank you, and good holidays for those who are taking holidays in August.
Thank you.